Deed of Postponement Indemnity Insurance Mortgage Company conveyancing requirements

Chelsea BS and Barnsley BS, as with most lenders, have their own specific instructions when it comes to deed of postponement indemnity insurance. The purpose of this page to assist conveyancing practitioners on the numerous lender solicitors panel where the title to be charged incorporates deed of postponement. Solicitors should still check the CML handbook requirements for each mortgage company, whether it be Santander, Bank of Scotland or Coventry BS. The content on this page Is not to be read as deed of postponement indemnity insurance advice.

Need help with deed of postponement indemnity insurance from your lender?

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Nationwide and HSBC like the majority of mortgage companies, requirements are that where deed of postponement indemnity insurance is effected:

• the deed of postponement indemnity insurance policy should be placed on risk without cost to the mortgage company
• the deed of postponement indemnity insurance policy needs to be for the benefit of the mortgage company and, if possible, in favour of the mortgagor and any next owner or bank. Where the borrower will not be protected by the deed of postponement indemnity insurance policy, the borrower must be informed accordingly.
• the deed of postponement indemnity insurance policy must not incorporate conditions that you are aware would void or compromise the interests of the bank
• you are responsible for approving the terms of the deed of postponement policy on behalf of the mortgage company
• your firm is required to reveal to the insurer all relevant information which you have obtained
• you must explain to the mortgagor that the borrower is obliged to adhere to any conditions of the deed of postponement indemnity insurance policy and that the mortgagor should notify the bank of any notice or potential claim in relation to the policy
• the limit of indemnity must meet the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
• your practice must send a duplicate of the deed of postponement indemnity insurance to the borrower and explain to the mortgagor why the deed of postponement indemnity insurance policy was effected and that a further policy may be mandatory if there is supplemental borrowing against the security of the property

As to the level of cover for the deed of postponement indemnity insurance policy (or for that matter any indemnity insurance), consider the following sampling of Paragraph 9.2 of the Part 2 requirements for lenders:

Non lender-specific considerations

The full terms, conditions and exclusions for deed of postponement indemnity insurance are explained in the policy paperwork. Conveyancing solicitors are obliged to point your non-lender client to the deed of postponement indemnity insurance policy itself. Deed of Postponement Contingency insurance is designed to afford indemnity in respect of the risks specified in the policy schedule - so it is essential check any draft to determine that it is in order. The lifetime of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.

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Deed of Postponement indemnity insurance: Important characteristics and benefits:

This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Deed of Postponement indemnity insurance Policies should be checked for the following

• The cost of altering or demolishing all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
• All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
• Liability for damages or compensation incurred in any action regarding the risks specified in the deed of postponement indemnity insurance, as well as legal and associated costs.
• Diminution in value resulting from the successful enforcement of the risks specified in the deed of postponement policy.
• Money paid with the written consent of the insurance company to free the property from the risks specified in the deed of postponement policy.
• The cost of works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, before the commencement of proceedings for the enforcement of the risks specified in the deed of postponement insurance, to the extent that such costs are rendered abortive by court decision.

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Due diligence should extend to checking that the answers on the application form are correct. However remote the likelihood of a claim on the lender insurance policy might be you can rest assured that the insurer will check the details on any proposal form very carefully before any claim is met.

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Supplemental considerations for deed of postponement indemnity insurance

Deed of Postponement insurance may satisfy lenders such as Godiva Mortgages or Halifax and prevent clients from from suffering financially but it cannot compensate for the stress and inconvenience the emotional suffering - after all the value of a home cannot always be measured in cash in the eyes of the owner.

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The content set out above covers to properties in England and Wales.